I.CON: The Industrial Conference Keynote Address

Seeing the Big Picture in Industrial

There’s a lot to discuss on the topic of global industrial development, but experts covered the highlights at the I.CON: The Industrial Conference keynote this week in Jersey City. Attendees had a chance to hear Mark Eppli, Ph.D., professor of Finance and Bell Chair in Real Estate at Marquette University, interview Gary Anderson, Prologis’ CEO for Europe and Asia, about the trends and opportunities that Anderson is seeing on a global scale. Here’s a look at some of what their conversation covered.


Back in the day, companies built a million-square-foot warehouse in the middle of nowhere to take advantage of tax incentives and cheap labor. That doesn’t work anymore – you can’t have your product a three-day drive away. Consumers expect the product same-day or next-day.

“If you can own a building that’s close-in and use it for last touch, that market isn’t going anywhere and rents can continue to rise,” Anderson said.

“Rents have a long way to run” on infill markets, Anderson said. “Speed-to-market areas are the place to put your money.” Companies are looking at cutting transportation costs, and if they’re able to do so by moving their last-mile facility closer to consumers, they’re willing to pay higher warehouse rent.


Who can compete with a global powerhouse like Prologis? “Our biggest competitors are those in local markets who have deep relationships,” Anderson said. His advice to be more competitive? Figure out what your customer’s pain points are and partner with them to learn how to address them. Anderson sees a future where local companies (without the reach and resources of Prologis) work together, pooling data to better serve their customers.

Prologis’ focus on customer service is evident. “It’s not a transaction, it’s a relationship,” Anderson said. When some of its customers have struggled to find labor, for example, the company has helped to address the issue by partnering with local communities to create training programs to develop talent.


“Every auto manufacturer on the planet is dumping money into autonomous vehicle (AV) technology,” Anderson said. “If anything slows us down, it won’t be the technology, it will be legislation and regulation.” Anderson asked the audience to imagine a future where AVs distribute products from a regional distribution center. There are limits on how far a human truck driver can travel in a 24-hour period – that won’t apply for AVs. So these regional distribution centers will all of a sudden have a much broader reach.

“Think about that same AV. What if it was powered by electricity, then solar, then powered by a battery better than Teslas today?” Anderson said. “What happens if transportation costs go to zero? Do all those cost savings go to the tenant? Supply chain? Last-mile warehouse?”


To close the session, Eppli asked Anderson a series of rapid-fire questions. Here’s Anderson shooting from the hip:

How do you think Amazon’s model will change over the next five years?

I don’t know how but it will. They’re testing new models every day. And I guarantee you will have a better customer experience as a result. [Amazon is Prologis’ single-largest customer].

What market are you not investing in that you’re looking at?

I look at India about every 18 months. They’ve made lots of progress on infrastructure and figuring out their taxes. But there’s a tremendously long runway – there’s plenty of time to figure out India.

What advice would you give a broker getting started in the industrial market?

Start by joining organizations like NAIOP. They’re important for networking. And find a place to work that meets your value system and culture. You can’t thrive in an organization that doesn’t.

Look for a place that gives responsibility to young people and lets them fail. I was lucky to be at a place where I could do that.

What inning are we in for the U.S. industrial market?

For the last mile: the second inning.

Money on purchase or sale?


IRR or cap rate?


Cap rates in five years in the U.S. – higher or lower than today?

Higher. Rents, too.

In 10 years?


Last-mile or first-mile investment?

Last mile!

Sunrise or sunset?


JLL logoThis post is brought to you by JLL, the Social Media and Conference Blog sponsor of NAIOP’s I.CON: The Industrial Conference. Learn more about JLL at www.us.jll.com or www.jll.ca.

You Might Also Like